WEI Malmö, 04/11/2016. EU developments relevant to the sector

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1 DG Internal Market, Industry, Entrepreneurship and SMEs Directorate C: Industrial Transformation & Advanced Value Chains Unit C-2: Resource Efficiency & Raw Materials WEI Malmö, 04/11/2016 EU developments relevant to the sector Jeremy Wall, Principal Administrator, Forest-based Industries, DG GROW/C-2 (Resource Efficinecy & Raw Materials) GROW

2 Main sector-relevant EU developments 1. Juncker Plan (IPE): EFSI 2. The Circular Economy 3. Cumulative Cost Assessment study of the EU Forest-based Industries

3 Juncker Plan (IPE): EFSI- general The Investment Plan for Europe (IPE), was adopted in November 2014 as the first major initiative of the Juncker Commission. It seeks to reduce investment gaps in Europe. As part of the IPE, the European Fund for Strategic Investments (EFSI) aims to contribute to this goal by supporting investments and increasing access to finance for SMEs and mid-cap companies. EFSI s dual objective is reflected in its two windows: the Infrastructure and Innovation Window (IIW), implemented by the European Investment Bank (EIB); and the SME Window (SMEW), implemented by the European Investment Fund (EIF).

4 Juncker Plan (IPE): EFSI- general With EFSI support, the EIB Group will provide funding for economically viable projects where it adds value, including projects with a higher risk profile than ordinary EIB activities. It will focus on sectors of key importance with the capacity to deliver a positive impact on the European economy, including: i. Strategic infrastructure including digital, transport and energy; ii. iii. iv. Education, research, development and innovation; Expansion of renewable energy and resource efficiency. Support for smaller businesses and midcap firms.

5 EFSI results so far By July 2016, under the Investment and Infrastructure Window, the EIB Board of Directors approved 97 operations, for a total approved amount of EUR 13.6 billion in EFSI financing. Under the SME Window, 192 operations have been approved. Those operations total EUR 6.8 billion in EFSI financing. Total expected investment triggered amounts to EUR bn i.e. 37% of the target. By 23 September 2016 the value of approved financing has risen to EUR 22.3bn with expected mobilised investment of EUR 127.2bn i.e 40% of the target.

6 EFSI proposed amendments 1 Following the stock taking communication of 1 June 2016, the Commission proposed amendments to the Regulation 2015/1017 (EFSI Regulation) on 14 September Main proposed amendments: Extending the operation of EFSI until the end of 2020 financed mainly form the contribution from CEF and EIB. The expected target of the mobilised capital is EUR 500 bn Reinforcing the additionality requirements to make sure that EFSI supports projects that could not otherwise be financed by EIB

7 EFSI proposed amendments 2 Introducing a target for investments in transport and energy projects contributing to COP21 EIB shall target that at least 40% on the EFSI financing under IIW supports projects with components contribution to the climate action, More proactive role for the European Investment Advisory Hub, particularly for investment platforms and projects in less developed regions. Furthermore, explicit references are included to support industry and services in less developed regions and transition regions that would not be covered otherwise in the policy objectives of the EFSI Regulation.

8 SME Window European Investment Fund (EIF) financing under the EFSI for the four approved agreements with intermediary banks or funds amounts to EUR 96 million. It is expected to trigger EUR 353 million in investments and benefit 715 SMEs and startups.

9 The European Investment Project Portal The European Investment Project Portal (EIPP) is a new web portal enabling EU based project promoters public or private to reach potential investors worldwide. It is part of the Investment Plan for Europe initiative to mobilise investment, promote economic growth and create more jobs across the EU. It responds to investors desire to see more potential EU investment opportunities in a central information platform. The EIPP is available from 1/6/2016. The portal presents 117 projects now.

10 The European Investment Advisory Hub The European Investment Advisory Hub is Europe s gateway to investment support. A joint initiative by the European Commission and the European Investment Bank under the Investment Plan for Europe, the Hub offers a single access point to a 360 degree offer of advisory and technical assistance services with the aim of strengthening Europe's investment and business environment.

11 Circular economy What is the Circular Economy? Maintaining the value of products, materials and resources in the economy for as long as possible while minimising waste generation To boost our economy and competitiveness with new business opportunities and innovative products and services. For economic, social and environmental gains

12 Circular economy Potential of the Circular Economy? Reduction of 500 million tons of GHG between 2015 and 2035(4) Up to 600 billion savings 8% of annual turnover for business in the EU (2) Possible direct jobs in waste management sectors created by 2035 For economic, social and environmental gains

13 From a Linear Economy

14 to a Circular Economy

15 Objectives of the new Package Synergies between environment and business agendas Preserve resources while creating business opportunities Closer links to other key EU priorities: climate and energy, jobs and growth, investment, innovation, social, industrial competitiveness Propose concrete and ambitious action where EU intervention has high added value e.g. long-term vision and targets on waste management; internal market rules for products; environment and consumers protection; regulatory obstacles or enforcement issues; innovation and investments

16 The Circular Economy Package Adopted by the Commission on 2 nd December 2015 Action Plan Communication List of Follow-up Initiatives (Annex) Legislative proposal on waste

17 Action Plan

18 Circular economy New targets packaging waste recycling % Prep for resue and recycling 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Existing targets 2012 (latest data) Target 2025 Target 2030 Plastic Wood Ferrous metal Aluminium Glass Paper and cardboard Overall Repeal of the recovery and max recycling targets Clarification on measuring (same approach as for municipal waste)

19 Circular economy (2) Extended producer responsibility Minimum requirements to be respected by Member States when developing and applying EPR, including: Definition of the roles and responsibilities of the actors Defining measurable targets and a reporting procedure Information, transparency, dialogue Full cost coverage Monitoring by Member States Link between the product's true end-of-life cost and fees to be paid by producers

20 Cumuative Cost Assessment (CCA): Overview CCAs: Cumulative cost assessments (CCAs) identify and quantify the various types of cost impacts (monetary obligations, CAPEX, OPEX, administrative burden, etc.) borne by a given industrial sector so as to comply with specified EU legislation. Focus: DG GROW has focused on the CCAs of EIIs (Energy Intensive Industries), as they are subject to numerous EU regulations. The aim is to cover the major EIIs. Time-line: so far, three CCAs have been already published - with very different results, and two more are being completed. They have been based on solid data, which in many cases have been collected at plant level. CCA for Steel published (2013)* CCA for Aluminium published (2013)* CCA for Chemicals published (2016)** CCA for Forest-based Industries ( F-BI ) being published (2016) CCA for Ceramic and Glass to be published (2017) * See materials/industries/metals/index_en.htm ** See GROW 20

21 Methodology The CCA F-BI employed the same basic methodology as its predecessors (streel, aluminium, chemicals), as far as possible following the Better Regulation Guidelines (e.g. Standard Cost Model for admin. costs), developing clear, specific choices when needed and using secondary data to verify and augment data obtained directly from surveys of sectoral companies and for non-eu countries. The main steps were: i) using a Mirror Group (key sectoral EU-level industrial federations) to prioritise EU legislation likely to have significant cost impacts & identify typical companies; ii) a pilot survey to test cost-related questions and survey issues; (NB the reporting problems for SMEs of furniture & printing led to excluding those sub-sectors); iii) a main survey and interviews for typical woodworking and pulp, paper & paperboard companies, spread across the EU, based on eight legislative packages; iv) an initial cost-impact calculation was verified via an on-line survey to many companies and secondary data used both to verify indirect costs (pulp & paper) and identify cost structures for non-eu countries; v) for each legislative package, the various types of cost impacts (monetary obligations, CAPEX, OPEX, administrative burden, etc.) were quantified for the period , not only for woodworking and pulp & paper but also some branches. Cost structures were also compared between the EU and Brazil, China and the USA. 21 GROW

22 Results: Woodworking CCA Forest-based Industries (F-BI): woodworking; Direct legislative cost as % of added value: trends GROW

23 Results: Woodworking CCA F-BI: woodworking: comparative direct legislative costs by package and cost type (averages ) 23 GROW

24 Cost Structures CCA F-BI: woodworking: comparative cost structures (EU, Brazil, China, USA: averages ) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% EU CN BR US Raw materials Energy Labour Other costs 24 GROW

25 Conclusions CCA Main conclusions: Legislative costs vary significantly across different F-BI sub-sector and between woodworking sub-sectors, reflecting different product groups & production chains and hence company profiles (e.g. size, structure, efficiency etc.). The highestcost as % of added value is for wooden containers & packaging;thelowest in builders carpentry and joinery. The costs for wood-based panelsand sawnwoodas a % of those sub-sectors added values all in v-between those of wooden packaging and builders carpentry & joinery. Woodworking: cumulated legislative costs are mainly from: environment & phytosanitary, and climate & energy acts. By far the biggest single item is the cost of phytosanitary legislation born by the wooden containers & packaging sub-sector Globally, EU woodworking has a similar cost structureto China, thus much higher wood costs that Brazil or the USA. GROW

26 Thank you! Jeremy Wall European Commission, DG Internal Market, Industry, Entrepreneurship and SMEs Unit C2 - Resource Efficiency and Raw Materials ENTR GROW F3 G3 26